Burundi lost about 6 billion US dollars between the 1970s and 2018. These figures come from the researcher and professor at the University of Massachusetts, Léonce Ndikumana. This capital flight, which also affects other African countries, is due to the lack of good governance of leaders, the mismanagement of natural resources, as well as the practice of under-invoicing and over-invoicing of exports.
Pr Léonce Ndikumana: “I implore the Government of Burundi to put in place transparent strategies to assess the quantity of mineral production, particularly in areas prone to leaks.”
During the presentation of his book Capital Flight from Africa: The Plunderers and the Facilitatorsof which he is co-author, Professor Léonce Ndikumana explains that the amount lost by Burundi between 1970 and 2018 is divided into two categories. The first concerns the money lost in the country’s official accounts, escaping the control of the State. This sum, called the “residue” of the balance of payments or “missing money” by economists, amounts to 2.4 billion USD.
The second category is the amount lost through under-invoicing and over-invoicing practices, where business transactions are falsified to illegally move capital out. The amount lost is estimated at USD 2.7 billion.
Prof. Ndikumana points out that African countries rich in natural resources are the most exposed to capital flight. He observes the gap between national and international export data. Burundi is not exempt from this gap, as the researcher demonstrates. He reveals that, between 2000 and 2019, Burundi reported exporting USD 761 million in gold to the United Arab Emirates. However, data from the Emirates indicate that gold imported into Burundi exceeds this amount, reaching USD 1.4 billion. “There is Burundian gold that fell from the sky onto the soil of the Emirates,” jokes Prof. Ndikumana in front of the great personalities of the Burundian state, including the president and members of the government.
Strategies for assessing mineral production
“Africa is not benefiting from its natural resources, while extractive companies continue to accumulate money in their countries,” says Prof. Ndikumana. He explains that this is due to poor governance and the lack of nationalism on the part of leaders who sign disadvantageous contracts with extractive companies. He reminds Burundian leaders that the best way to benefit from natural resources is to become a shareholder in the extractive company, as Botswana has done.
It also calls on the Burundian government to put in place clear and transparent strategies to assess the quantity of mineral production, particularly in areas prone to leaks.
Another worrying phenomenon is the management of public debt. “More than 60% of the dollars borrowed return to the lending countries, but the countries must repay the entire debt,” informs the economic expert. This assertion seems to be a hard blow for the Minister of Infrastructure, Dieudonné Dukundane, who has just signed with his colleague of Finance a financing agreement of approximately 500 million USD. During a question and comment session, the minister insisted on the need for mechanisms and strategies so that the country can really benefit from foreign aid or loans. “I am very shocked to hear that, of the 500 million USD signed, the country will only benefit from 200 million USD,” he declared, mentioning that the lenders impose conditions on the origin of the equipment of the projects, often more expensive.
In response, Professor Ndikumana stressed the importance of objectively analyzing the clauses of contracts before signing them and of acting according to the reality on the ground.
The issue of identifying those responsible for capital flight was a concern for members of the government present at the conference-debate. Minister Dukundane proposed, if necessary, to consult the registers of importers and exporters to identify the individuals responsible for these practices. However, Professor Ndikumana clarifies that capital flight involves not only importers and exporters, but also politicians, members of the government and well-connected individuals, as was the case in South Africa, where those responsible were close to the presidential family.
What about facilitators?
Professor Léonce Ndikumana defines facilitators as those who illegally acquire funds through corruption, drug trafficking or falsified commercial transactions. “These funds are then illegally transferred abroad, without being properly recorded in official accounts. Finally, these funds are illegally held abroad, in tax havens, without being declared to the competent authorities,” he explains, adding that the international banking system facilitates these transfers. “The funds are transferred abroad via falsified commercial transactions or opaque bank accounts, without local authorities being able to trace them,” the expert demonstrates during the conference-debate.
According to him, capital flight has catastrophic consequences for the economy of countries. It leads to a lack of resources needed to finance development projects, especially infrastructure. It is also the cause of economic inequality, depriving ordinary citizens of essential public services. In addition, it worsens the budget deficit, reduces investment and increases the country’s dependence on the outside.
Combating capital flight
To combat capital flight, the expert suggests several measures: combating under- and over-invoicing of exports, establishing a global partnership, as capital flight is a global phenomenon, and digitalizing services to monitor and record all commercial transactions. This will help combat corporate corruption and facilitate the automatic and systematic sharing of tax and banking information between countries. The use of financial intelligence and investment by African countries in extractive industries can also mitigate this scourge.
In his speech, the President of the Republic of Burundi, Evariste Ndayishimiye, said that the country lost 17 million USD in coffee exports between 2016 and 2019. He indicated that these funds could have been invested in various growth sectors of the country, including health and transport for the purchase of fuel. He also reassured those who have concerns about the exploitation of Burundian mineral resources, saying that from now on, the export of these precious stones will consist of the export of finished products, which will limit the flight of capital from Burundi.
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